The EU uses 668 km3 of water for all of the goods it produces, consumes and exports annually. Roughly 38% is water from outside the EU with 98% of foreign water use coming for agricultural commodities mainly from: Brazil (20%); Argentina (11%); Indonesia (8%); Ivory Coast (8%); Ghana (4%); the US (4%); Ukraine (3%); Malaysia (3%) and India (3%).Source: Water Footprint Network Report

It measured water availability in countries for which the EU is reliant upon for agricultural commodities and compared with EU consumption of each commodity.

The report expects sugarcane, almonds and pistachios will be vulnerable in the near future due to current water scarcity.

Water scarcity is not affecting cocoa and coffee at present, but longer-term climate change may alter rainfall and weather patterns in origin countries ultimately harming these crops, it says.

‘They don’t see how vulnerable they are’

Dr. Ertug Ercin, project manager of the Water Footprint Network and co-author of the report told ConfectioneryNews water scarcity was “underestimated” by Europe’s confectionery industry.

“Multinationals are aware that there can be problems related to water scarcity, but they don't see how vulnerable they are in the case of a drought, or climate change....and the destruction it means for their production."

"This is a big issue...The current and future drought situations may affect businesses, including through an increase in commodity prices."

He added some agricultural commodities grow only in certain countries or climates, making it harder to source elsewhere.

"If the rainfall is not there, you have two choices: Either you have to irrigate or you have to find somewhere else.

"For example for cocoa, if you look at the chocolate industry, there's only certain places where it's grown. You don't have many choices - you can’t go to the Netherlands or Germany," he said.

Irrigation systems are not widely used in cocoa. Around 95% of cocoa
is grown by smallholder farmers on small land plots of one to three hectares, typically by West African farmers often living in poverty.

Dr. Ercin said confectioners might only be able to offset higher input costs via price increases so much before upsetting retailers and consumers.

"[Companies] realize there is a risk with climate change, but they are looking at climate from the perspective of global warming. They underestimate the water issues,” said Dr. Ercin.

"When there's a lack of water, competition for water increases, scarcity increases,” he said, adding this will ultimately lead to commodity price hikes.

Almonds ‘highly vulnerable’

Almonds are predicted to be the worst affected agri-commodity with 91% of EU almonds classified as “highly vulnerable,” according to the report

Almost all crops imported to the EU from India and Pakistan are in areas with high water scarcity, it adds.

Around 56% of EU sugarcane imports are vulnerable, the report says.

India - the world's second largest sugar producer behind Brazil - is highly vulnerable to water scarcity. Source: Water Footprint Network report

According to Dr. Ercin, most EU businesses will opt for locally sourced beet sugar. However, he said once the sugarcane supply from outside the EU declines – for example in India - there will be increased demand for EU beet sugar causing a spike in prices.

Drought is already harming hazelnut production in Turkey this year, he added.

"Next year, the chocolate industry will suffer and it will affect their prices if they are producing hazelnut chocolate,” said the report author.

Cocoa vulnerable if rainfall patterns change

Current water scarcity is creating immediate risks for these crops. However, any future disruption in rainfall patterns driven by climate change could impact other crops, such as cocoa, says the Water Footprint Network’s paper.

"At the moment they are not vulnerable,” said Dr. Ercin.

“But rainfall patterns will change and areas [such as West Africa] can be negatively affected…that's the worry there. These are ‘rain fat’ commodities - they mostly grow by rainfall,” he said.

South America – particularly Ecuador, Peru and Bolivia – are the most vulnerable cocoa origins, according to the report’s maps.

Virtual water is the volume of water used to produce a commodity. The researchers assessed vulnerabilities due to drought (green virtual water) and water scarcity (blue virtual water). Source: Water Footprint Network.

"West Africa, Indonesia and Malaysia are the least impacted," said Dr. Ercin.

What can companies do?

Dr. Ercin suggested companies map where water scarcity and drought may affect their business most and look at adaptation measures, such as increasing water productivity.

Climate change and cocoa forecasts

Source: CIAT

Analysis
published last year by the International Center for Tropical Agriculture (CIAT) predicts a 57% reduction in high climatic suitability areas in top cocoa producing nation Côte D’Iviore from present day to 2050.

The report author urged companies to take a holistic approach, looking beyond solely where they source their agri-commodities.

"Most of the time they look at [their direct supply], which is not enough, they have to look at the situation of the whole water resources in the area because ultimately if anything goes wrong it will affect them,” said Dr. Ercin.

He advised companies to support vulnerable regions by promoting good agricultural practices, infrastructure and irrigation systems.

"The most important thing is to build the capacity of the growers at every level,” he said.

The report was the first phase of the Water Footprint Network’s project.

It will further explore how climate change and weather extremes may alter the vulnerability levels of different economic sectors in the EU and will assess the economic consequences.

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